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Government Contractor Compliance & Regulatory Update

DOL Announces Five-Year OFCCP Moratorium For TRICARE Providers

Posted in OFCCP

Secretary of Labor Thomas E. Perez announced last month that the Office of Federal Contract Compliance Programs (OFCCP) will issue a directive establishing a five-year moratorium on enforcement of affirmative action obligations for TRICARE providers.  In his March 11, 2014 letter to the leadership of the House Committee on Education and the Workforce, Secretary Perez stated that during the moratorium period OFCCP will “limit its enforcement activities” with respect to TRICARE contractors and subcontractors.

Providers for TRICARE, the Department of Defense’s managed health care program for active duty and retired military members and their families, have had a long history with OFCCP.  In fact, Secretary Perez’s letter comes in direct response to years of court battles and resistance from TRICARE providers to OFCCP’s attempts to assert jurisdiction over them.

The letter does not concede that OFCCP lacks jurisdiction over TRICARE subcontractors.  Instead, during the five-year moratorium period, OFCCP has promised to conduct “extensive outreach” to clarify when TRICARE providers may be subject to OFCCP oversight.  Although the moratorium provides a temporary reprieve to TRICARE providers, a permanent solution in the form of congressional legislation (H.R. 3633 or the “Protecting Health Care Providers from Increased Administrative Burdens Act”) may soon follow.

OFCCP Withdraws Claim Regarding TRICARE Jurisdiction

Posted in OFCCP

Last week, the Office of Federal Contract Compliance Programs (OFCCP) dismissed OFCCP’s 2008 complaint against Florida Hospital of Orlando.  In its Order of Dismissal, the Administrative Law Judge (ALJ) reported that OFCCP notified its office on March 28, 2014 of its intent to withdraw the agency’s long-running enforcement proceeding against Florida Hospital.  The ALJ granted the parties’ joint request that the matter be dismissed with prejudice.  The dismissal follows the Department of Labor (DOL)’s agreement to a five-year moratorium on compliance investigations and proceedings of providers for TRICARE, the Department of Defense’s managed health care program for active duty and retired military members and their families, and proposed legislation (H.R. 3633) broadly exempting healthcare providers. Continue Reading

President Takes Executive Action Over Pay Equity By Federal Government Contractors

Posted in Discrimination

Today, in connection with “Equal Pay Day” ceremonies at the White House, President Obama issued an Executive Order and a Presidential Memorandum aimed at ensuring that employees of Federal government contractors and subcontractors are not discriminated against with regard to compensation on the basis of race, color, religion, sex, or national origin.

The Presidential Memorandum directs the Secretary of Labor to propose rules requiring Federal contractors and subcontractors to submit to the Department of Labor (DOL) summary data on the compensation paid to their employees by sex and race.  The rules must be proposed by August 6, 2014.  President Obama expects the rules to enable DOL to direct enforcement resources toward entities for which reported data suggest potential discrepancies in worker compensation. Continue Reading

Obama Requests Increased OFCCP Funding in FY 2015 Budget

Posted in OFCCP

On March 4, 2014, Secretary of Labor Thomas Perez released OFCCP’s FY 2015 budget request, which includes a request for over $107 million in funding for OFCCP’s operations.  This amount represents a $3 million increase over 2014, including funding for an additional 10 full-time equivalent employees.

Significant in the FY 2015 budget is a request for an additional $1.1 million dedicated to strengthening efforts to eliminate pay discrimination affecting women.  The 10 additional employees requested in the budget are intended to support this effort.  OFCCP’s augmented focus on pay equity in FY 2015 continues OFCCP’s focus on compensation issues, including the issuance of a recent Directive concerning compensation analyses and audits and a notice of rulemaking concerning a new compensation data collection tool.

Other highlights include: Continue Reading

White House Announces Additional Executive Orders For Federal Government Contractors

Posted in OFCCP

President Obama is expected to sign two executive orders that will impose additional compliance obligations on federal government contractors.  The first order will reportedly bar federal contractors from retaliating against employees for discussing pay issues with co-workers.  The President is also expected to sign a second executive order directing the Department of Labor to promulgate rules requiring federal government contractors to provide compensation data based upon the race and sex of their employees.  These requirements (applicable to all employers) are also contained in bills currently pending in Congress.

These executive orders continue a trend by the administration to place new requirements on the federal contracting community similar to pending federal legislation.  In February, for example, President Obama issued an Executive Order to increase the minimum wage for employees of federal contractors and subcontractors to $10.10 an hour after a bill that would have imposed such a requirement on all employers failed to pass Congress.

DOD Issues Proposed Rule Extending Limitations on Contractor Employee Personal Conflicts of Interest

Posted in Federal Acquisitions

The Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) have issued a proposed rule amending the Federal Acquisition Regulations (FAR) to extend the limitations on contractor employee personal conflicts of interest.  The proposed rule will extend those limitations to the performance of all functions that are closely associated with inherently governmental functions and contracts for personal services.  Functions closely associated with inherently governmental functions include services that involve or relate to budget preparation, feasibility studies, and the evaluation of another contractor’s performance.  They also include contractors providing assistance in the development of statements of work or participating in any activities or functions that could lead to the assumption that they are agency employees or representatives. Continue Reading

OFCCP Adds New Resources to Disability and Veterans Community Resources Directory

Posted in Disability, OFCCP

Last month, the Office of Federal Contract Compliance Programs (OFCCP) created the Disability and Veterans Community Resources Directory.  The goal of the Directory is to assist contractors in locating community and other resources for recruiting veterans and individuals with disabilities.  The Directory contains a non-exhaustive list of groups and organizations that are available to provide assistance to contractors with training, recruiting and hiring veterans and individuals with disabilities.  On April 4, 2014, OFCCP added 24 new resources to the Directory.

The Directory can be accessed at http://www.dol-esa.gov/errd/resources.html.


New Louisville “Ban the Box” Ordinance Covers City Contractors, Continues Growing Trend

Posted in Employment Law

Mayor Greg Fischer recently signed an ordinance that generally prohibits the Louisville Metro Government (hereinafter, “City”) and its vendors from inquiring into an applicant’s criminal history on the initial job application. 

The Ordinance joins an ever-growing patchwork of laws that curbs inquiries into or the use of an applicant and/or employee’s criminal history in employment decisions.  Indeed, approximately 10 states and 50 localities have “banned the box” and, although many of these laws only apply to public employers, several local ordinances cover government contractors in particular, including in Compton (CA), Richmond (CA), Hartford (CT), New Haven (CT), Indianapolis (IN), Boston (MA), Cambridge (MA), Worcester, (MA), Detroit (MI), Atlantic City (NJ), New York City (NY), and Pittsburgh (PA).  Nine other jurisdictions—Hawaii, Massachusetts, Minnesota, Rhode Island, as well as the Cities of Philadelphia (PA), Newark (NJ), Buffalo (NY), Seattle (WA), and San Francisco (CA)—also have “banned the box” for private employers (either expressly or implicitly covering government contractors).  And, many more jurisdictions have imposed other limitations on criminal background checks for private and public employers, as well as for city vendors.

This post examines the obligations that vendors face under the new Louisville Ordinance and proposes best practices for compliance. Continue Reading

OFCCP Updates FAQs On Section 503 And Veterans’ Regulations

Posted in Affirmative Action, Affirmative Action Plan (AAP), Department of Labor, Disability, Discrimination, Employment Law, OFCCP, Veterans

OFCCP recently updated its Frequently Asked Questions (“FAQs”) on the implementation of the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) and Section 503 of the Rehabilitation Act final rules.  The most recent FAQs address questions regarding the availability of the “EEO is the Law” poster, the ability to use human resource information systems as the data analysis file for self-identification records, and acceptable language for Equal Opportunity clauses.  Continue Reading

District Court Rejects Challenge to Section 503 Final Rule

Posted in Disability, OFCCP

On Friday, March 21, 2014, Federal District Judge Emmet Sullivan ruled in favor of the Office of Federal Contractor Compliance Programs’ (“OFCCP”) recent rule implementing Section 503 of the Rehabilitation Act, denying a challenge by the Associated Builders and Contractors trade organization (“ABC”).  As a result, OFCCP’s Rule—“Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals with Disabilities (“Final Rule”)—will go into effect today unchanged.

ABC filed suit in federal district court in 2013 seeking to invalidate the Final Rule.  ABC argued that portions of the Rule (1) were contrary to Section 503; (2) were arbitrary and capricious in violation of the Administrative Procedure Act; and (3) violated the Regulatory Flexibility Act, 5 U.S.C. §601.  The Court rejected ABC’s arguments and granted OFCCP’s cross-motion for summary judgment.

As discussed in prior posts regarding Rule FAQs, an update to the FAQs, the self-identification form, and OFCCP guidance, OFCCP promulgated its Final Rule implementing Section 503, which applies the Rehabilitation Act to government contractors, in September 2013.  The Rule requires government contractors to (1) gather information on the disability status of job applicants; (2) compile that data and related data on new employees, along with the total number of job openings, job applicants, and jobs filled; and (3) establish a utilization goal as a benchmark against which contractors can measure the efficacy of their affirmative action steps. 

ABC argued that the requirements are contrary to Section 503 because their promulgation exceeds OFCCP’s delegated authority to effectuate affirmative action policy under the Rehabilitation Act.  The Court disagreed, finding that the requirements fall squarely within that authority.  ABC also argued that the requirements exceed OFCCP’s authority because they violate the Americans with Disabilities Act (“ADA”) insofar as they force a contractor to inquire as to an applicant’s disability status.  The Court disagreed, ruling that the Rule merely requires contractors to invite applicants to volunteer information.  The Court additionally found that the Rule’s requirements were not unreasonable, that they were neither arbitrary nor capricious, and that they are not an unjustified departure from past practice.

The Court also rejected ABC’s argument that the construction industry should be exempted from the utilization goal.  Historically, affirmative action obligations of construction contractors have been less stringent due to “the fluid and temporary nature of the construction workforce.”  The Court found, however, that OFCCP reasonably declined to exempt construction contractors because construction contractors already comply with similar data collection requirements under Executive Order 11,246.  The Court also expressly rejected ABC’s argument that it was impossible for construction contractors to find enough qualified individuals with disabilities to hire due to the industry’s hazardous and physically demanding jobs.

The ruling means that the Final Rule will take effect today.